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Q: I’m the executor of my mother’s estate. The sale of her house and its belongings will be divided evenly among her surviving children. I had the home’s furnishings appraised and am preparing them for sale. What happens if some of the items do not sell? Or if they sell for far less than the appraised value? As the executor, would I be personally liable for any shortfalls and be expected to pay my siblings the difference?
A: As the executor of the estate, your job is to settle your mother’s financial affairs and divide her assets among her heirs in accordance with the will. It’s not your job to pay your siblings if the estate is ultimately not as valuable as you think. But you are expected to make prudent decisions about how you liquidate it.
“What’s prudent is going to depend on the nature of the assets,” said Douglas F. Allen, Jr., a trusts and estates attorney in the Manhattan office of the law firm Seyfarth Shaw.
If the estate has, say, a valuable 19th-century armoire and you sell it at a yard sale, your siblings could hold you responsible for being careless with their inheritance. Your job is to figure out how to appraise it and find the best venue to sell it, whether that’s at an auction or through an antiques dealer. However, if the piece appraises for a modest sum, you may decide to sell it at an estate sale. If it sells for far less than the appraised value, then it was only worth that much. And if no one buys the hulking piece of furniture, then the cost of disposing it comes out of the estate.
The same goes for the house. Consult a real estate broker, gathering advice about whether you should list the property as is or spend money from the estate on upgrades or staging. If the broker suggests listing it for $750,000, but it sells for $700,000, then that’s all the money you have to split up, minus whatever expenses you incurred, like hiring cleaners or paying the broker’s fee, said to Robert D. Steele, a partner at the Manhattan law firm Schwartz Sladkus Reich Greenberg Atlas, where he is head of the firm’s trusts and estates department.
To avoid a conflict among the siblings, have a conversation with them now, before any heirlooms are sold or divided up. Explain the process, and whatever guidelines have been laid out in the will. “Make sure you set up the rules up front,” Mr. Steele said. “Make sure they understand.”
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